Since its creation, Bitcoin has been at the forefront of financial innovation, symbolising decentralisation and financial independence. Furthermore, its price serves as a benchmark for other cryptocurrencies while sharing many fundamental properties with gold.
BTCUSD, as the premier cryptocurrency, possesses enormous market power and remains one of the most sought-after trading assets. Many strategies employed in forex trading can easily be applied to crypto trading as well.
1. Fundamentals
Fundamental analysis is a form of investment research that analyzes various factors to establish intrinsic value. These may include user community sentiment, real world utility metrics, technological advances or regulatory changes.
As Bitcoin does not produce cash flows, its valuation must be determined using future expected values. There are various approaches for determining an equitable price for this asset; discounted cash flow models or mining difficulty analysis could both help.
Bitcoin prices fluctuate due to a range of factors. Media coverage, influential opinions and regulatory developments can all create short-term price shifts due to uncertainty caused by their presence or absence, with their limited supply limiting demand and contributing to market instability. Large holders such as whales can have an outsized effect as their large trades can influence price swings in one way or another.
2. Technical
As the pioneer cryptocurrency, Bitcoin BTCUSD stands as an icon for decentralisation and financial independence.
2021 has kicked off on an upbeat note for Bitcoin, driven primarily by institutional investment entering the cryptocurrency space. Major companies such as Tesla and MicroStrategy Incorporated both made significant investments into cryptocurrency in 2021 and should provide long-term benefits to the pair.
BTCUSD currently sits at a 50% retracement from its all time highs seen in late 2017. One of the best technical trading strategies for BTCUSD involves employing On-Balance Volume (OBV), an indicator which uses both price and volume to predict momentum in stocks; OBV can be applied effectively to predict momentum when applied to Bitcoin; rising prices should coincide with rising OBV, and falling prices with decreasing OBV values.
3. News
Bitcoin saw its price plummet from its record high just prior to March 20, when profit-taking and negative remarks by US Treasury Secretary Janet Yellen caused its price to dive.
Still, fundamentals remain positive. Institutional money continues to flood into the crypto market while major corporations like Tesla and MicroStrategy Incorporated have announced massive investments in Bitcoin.
Geopolitical events can generate uncertainty in financial markets, prompting more people to adopt crypto as a digital store of value and buffer against economic instability. Furthermore, USD is the world’s most traded fiat currency; therefore it can have a considerable influence on BTC/USD price fluctuations; news from US Federal Reserve can have an even bigger effect as interest rate announcements occur eight times annually, thus having an effectful ripple-through into crypto/USD trade price movements.
4. Leverage
PrimeXBT provides traders with leveraged products that help increase potential profits while decreasing capital outlays. At PrimeXBT we provide exposure to major crypto markets such as BTCUSD without needing to commit large sums of capital upfront.
Perpetual futures are our most popular leveraged product, enabling traders to trade leveraged BTCUSD positions with just a minimum deposit of $2,000 and use collateral as protection from potential losses. It’s important to keep in mind that leveraged trading magnifies both gains and potential losses; our risk disclosures provide more details. Furthermore, leveraged trading may incur maker/taker fees in addition to standard exchange opening/rollover fees – these should all be factored into your trading decision process.
5. Trading hours
Bitcoin and other cryptocurrencies don’t fall under traditional asset trading hours like other assets; they can be traded 24 hours per day, 365 days a year (excluding maintenance times).
Successful crypto traders know that global market session overlaps are often the times with the highest trading volumes, offering greater opportunities to make profits and faster trade execution.
As Bitcoin is traded against the USD, its price often responds to United States economic data reports. Therefore, trading BTCUSD during the USA market session – from around 7:00-17:00 GMT – often provides more opportunities to profit from short term trends in this pair.
